Hedge funds to see pre-crash levels this year

GLOBAL hedge fund assets shot up by 13 per cent last year to $1.9 trillion (£1.1 trillion), with further recovery to pre-crisis levels predicted for 2011.

The leap marks the second consecutive year of growth, according to a report by financial services industry body TheCityUK.

London remains the largest centre for managers of hedge funds, second only to New York. Almost 20 per cent of global hedge fund assets under management are controlled from the capital, whilst Wall Street handles 41 per cent.

Global net inflows into hedge funds totalled $65bn in 2010, whilst a ten per cent performance return also added to the growth in funds under management.

Fund of hedge funds’ assets also grew 10 per cent to $550bn, a third below their 2007 pre-financial crisis peak.

Confidence amongst investors has returned, following several years of caution due to the economic downturn and reputation damage from the Bernard Madoff fraud.

The trend could be set to continue, bar any further economic turbulence, with funds under management likely to recover to pre-crisis levels by the end of this year, the report claims.